New | Geely shares soar to record on report it’s buying Proton’s Malaysia car assembly

A successful Proton bid will add 150,000 units of annual capacity to Geely’s output and give the Chinese carmaker access to Asean’s 10-member market

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A Chinese visitor tries out Geely’s Emgrand car at an auto show in Nanjing. Photo Imaginechina

Published: 6:45pm, 3 Feb 2017Updated: 6:16pm, 7 Jul 2017

Shares of Geely Automobile Holdings, the Chinese owner of the Volvo brand of passenger vehicles, surged to a record, as mainland Chinese traders returning from a weeklong holiday piled into the stock on report it’s buying control of a factory in Malaysia.

Geely shares rose as much as 9 per cent in Friday trading, ending the day 8.4 per cent higher at HK$9.75 in Hong Kong. The stock more than tripled in the last 12 months, making it the best performer among 473 stocks on the Hang Seng Composite Index.

Geely, based in the Zhejiang provincial capital of Hangzhou, is a leading contender to buy a 51 per cent controlling stake in Malaysia’s largest carmaker Proton Holdings Bhd., according to a Thursday report in The Star newspaper, which cited unidentified sources.

Geely’s shares soared to a record as investors piled into the stock following a report that the Hangzhou-based carmaker is bidding to buy control of Proton’s assembly Malaysia.

The Chinese carmaker has been actively seeking overseas acquisition targets, Geely’s Hong Kong-based executive director Lawrence Ang said in a phone response to the South China Morning Post, without confirming or denying his company’s Proton bid.

Geely is up against Europe’s second-largest carmaker Groupe PSA, which owns the Peugeot and Citroen brands globally, in vying for Proton. The French carmaker is already a technical partner to Proton, providing its Citroen AX model as the basis for Proton’s Tiara compact car, launched in 1995. Production of that model ended in Malaysia in 2000 amid tepid sales.

The successful bidder will get access to Proton’s Tanjung Malim assembly, with the annual production capacity of 150,000 vehicles in two shifts. Owning a car assembly in Malaysia also qualifies its owner to ship vehicles tax-free anywhere among the 10 members of the Association of Southeast Asian Nations, or Asean, with a combined population of 623 million people.

If the deal comes to fruition, it reflects Geely’s ambition to expand its footprint into Southeast Asia, said Robin Zhu, a Hong Kong-based auto analyst at Sanford C. Bernstein.

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